Tonight’s short tweet storm is about pricing your product. (Assuming not free consumer app)
How do you know what price to set? How can you change it later? Etc
Read on >>
How do you know what price to set? How can you change it later? Etc
Read on >>
1) tl;dr
In the beginning don’t worry about optimizing your price. Just make sure you cover your costs.
Eg if there are manual onboarding costs, charge for your time
In the beginning don’t worry about optimizing your price. Just make sure you cover your costs.
Eg if there are manual onboarding costs, charge for your time
2) In general, setting a price - any price - is a huge leg up from no price.
Eg This is why I’m a big fan of paid pilots vs free pilots. Even if it’s a cheap pilot, it’s way better than free. Why?
Eg This is why I’m a big fan of paid pilots vs free pilots. Even if it’s a cheap pilot, it’s way better than free. Why?
3) The customer needs to go through the whole process of buying - even if it’s just for a few dollars.
It becomes real.
In contrast, anyone can say yes to something free. That’s not as good of a test of how much ppl care about your product.
It becomes real.
In contrast, anyone can say yes to something free. That’s not as good of a test of how much ppl care about your product.
4) with skin in the game - any amnt - customers are also more likely to give you direct feedback on what is working and what isn’t. This helps you improve faster.
With a free product, it’s easy to be indifferent.
With a free product, it’s easy to be indifferent.
5) But it’s impt to set expectations with your customer - whether consumer or b2b:
“This is special pricing for you as an early adopter. But only for a limited time period.”
“This is special pricing for you as an early adopter. But only for a limited time period.”
6) This allows you to increase your price without complaints later.
Another strategy is to grandfather existing customers into an old price for a long time and only increase it for new customers.
Another strategy is to grandfather existing customers into an old price for a long time and only increase it for new customers.
7) Not only should you cover costs but you ideally should also cover timing of costs.
Ie upfront annual payment is always best. Monthly is ok. Invoice after all the work is done is the worst.
Ie upfront annual payment is always best. Monthly is ok. Invoice after all the work is done is the worst.
8) these days there are factoring or invoice-based loans that can get you cash upfront in case you are in an industry where the norm is the latter. But ideally you want to test whether your market will do all upfront for a yr.
9) And it’s often in the framing. For example membership clubs often charge annual fees upfront...ppl are used to paying that way.
Can you frame your service / product as a club?
Especially if you have any type of community attached to your product, that’s a membership club!
Can you frame your service / product as a club?
Especially if you have any type of community attached to your product, that’s a membership club!
10) So in short:
-cover your costs
-charge something to get your customer committed
-don’t worry about optimizing price - you can adjust as you go
-set expectations w customers that prices will go up
-try to get upfront cash if you can
-cover your costs
-charge something to get your customer committed
-don’t worry about optimizing price - you can adjust as you go
-set expectations w customers that prices will go up
-try to get upfront cash if you can
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